This document summarizes Petrobras' 2007-2011 Business Plan which provides for $87.1 billion in capital expenditures, a 66% increase from the previous plan. The plan aims to increase oil and gas production to 4,556 thousand barrels per day by 2015, a significant leap. It also incorporates renewable energy targets for the first time. In the first half of 2006, Petrobras reported a 56% increase in net income to $6.5 billion due to a 7% rise in domestic oil and gas output.

1. Sharing in Petrobras
I N V E S T O R R E L A T I O N S • Y E A R VI • N º 21 / S E P T E M B E R 2 0 0 6
2007-2011 Business Plan
HIGHLIGHTS
Petrobras joins the DJSI
■ On September 18, Petrobras became a
A
component of the Dow Jones Sustainability World
pproved by the Board in June, the 2007-2011 Business Plan pro-
Index (DJSI), the most important index of its type in vides for total capital expenditures of US$ 87.1 billion – 66%
the world – serving as a bellwether for socially and more than in the preceding plan (2006-2010) – and correspon-
environmentally responsible investors. ding to an annual capex outlay of US$ 17.4 billion. “This can be charac-
The index is the passport to entry into a potential terized as a long-term highly sustainable plan offering extremely inter-
market of investors in socially and environmentally
esting returns to shareholders”, says Petrobras’ president, José Sergio
responsible companies worth more than
US$ 4 trillion, according to United Nations Gabrielli. Of the total investments, US$ 75 billion (86%) will be applied
Organization data, in Brazil and US$ 12.1 billion overseas.
and representing more than US$ 5 billion in Petrobras estimates the Company’s cash flow at US$ 86.7 billion dur-
investments in the DJSI’s component companies. ing the period (net of dividend payouts), reflecting a sales policy for its
product prices in line with the international market. Cash flow will thus
Bond Issue
almost cover the entire requirements under the Capital Expenditures
■ On September 27, through its wholly owned
subsidiary PIFCo, Petrobras finalized the private Plan for the period. Funding in the capital markets will amount to
placement of securities worth 35 billion yen (about US$ 12.6 billion. Debt amortization will absorb a further US$ 12.2 billion.
US$ 300 million) in the Japanese capital markets. The Business Plan maintains the Company’s aggressive growth targets
The principle objectives behind this new issue were and, for the first time, sets a long-term production target of 4,556 thou-
to reopen the Japanese market, gain access to a
sand barrels equivalent of oil and gas per day by 2015, a measure of the
new investor base and raise funding at competitive
degree which Company’s production scale is to be transformed. “It is
costs on the back of the Company’s investment
grade rating. The issue carries a semi-annual an absolutely amazing leap forward for Petrobras”, says the
coupon of 2.15% p.a., a maturity of 10 years (bullet) Company’s president. An annual production growth rate of 7.5% fore-
and the partial guarantee of the Japan Bank for casted to 2011 is the highest in the oil industry. For the first time, the
International Cooperation. strategy incorporates targets for renewable energy sources, including
bio-diesel plants, H-Bio production, ethanol pipelines, and wind and
Buy-back of Bonds
solar energy. Planned investments for developing renewable energy
■ On July 25, Petrobras concluded an offer
to repurchase five series of bonds worth a total sources and bi-fuels amount to US$ 700 million.
US$ 1,216 million issued by Petrobras International In addition to major growth in investments in Exploration and
Finance Company (PIFCo), a wholly owned Production (63%) and in the Downstream area (62%), planned expan-
Petrobras subsidiary. As a result, the Company sion in Gas and Energy (56%) to meet the country’s growing demand for
will cut the outstanding balance of these bonds
gas is also highly significant. Investments in Distribution (131%) are sim-
trading in the market from US$ 2,950 million to
ilarly designed to ensure the Company’s leadership and growth in this
US$ 1,734 million, reducing and simplifying the
debt profile. segment. In adjusting corporate strategies and objectives, Petrobras
Morgan Stanley and UBS acted as arranging banks
plans to improve its penetration in the overseas market both in
for the transaction, The Bank of New York as the Exploration and Production as well as in refining where there are projects
depository and as Luxemburg agent for the offers for the acquisition of three refineries. The Company’s market capitaliza-
and D.F. King & Co. as the information agent. tion, currently at US$ 83.4 billion, is expected to double by 2011.
First-Half 2006 Petrobras in Governance and
Results Buenos Aires Sustainability
PAGE 2 PAGE 4 PAGE 4

2. PROFITABILITY
First-Half 2006 Results (US GAAP)
F
irst semester consolidated net The increase in net revenues was US$ 3,476 million being dedicated to
income was US$ 6.5 billion, 56% accompanied by a rise in cost of goods the development of domestic oil and
higher than for the same sold, in line with the world market as a natural gas production. During the
period in 2005 thanks to a 7% whole. Expenses relating to the gov- period, the oil and oil products trade
growth in the domestic output of oil ernment “take” also saw an increase. balance reported a surplus of 76 thou-
and liquefied natural gas (LNG). Net This reflected rising oil and natural gas sand bpd.
operating revenues were US$ 33.5 bil- output from new high production The Company’s voting and non-voting
lion in the period, a year-on-year fields such as Barracuda and Caratinga, ADRs reported an appreciation of
increase of 37%, largely due to the and the increase in the reference prices 25.3% 25.3% and 24.03%, respec-
increase in oil and oil product prices in used by the ANP (National Petroleum, tively, for the period against an
the domestic and overseas markets. Natural Gas and Biofuels Agency) increase in the Dow Jones stock index
Domestic oil and LNG production for setting the rates for the special gov- of 4.04%. The improved performance
increased by 7% compared with ernment participation and bench- of Petrobras’ shares reflects their
2005, principally due to the commis- marked to the international price of increased liquidity as well as spiraling
sioning of the P-43 (Barracuda), P-48 Brent crude. international oil prices. Outstanding
(Caratinga), P-50 (Albacora Leste) and The Company continued to pursue long-term debt, plus the current por-
FPSO-Capixaba (Golfinho) platforms. its pricing policy in line with the medi- tion of our long-term debt, decreased
The bunching of scheduled mainte- um term international market and to US$ 12,152 million on June 30,
nance stoppages at nine producing avoiding the passing through to the 2006, as compared to US$ 12,931 mil-
units in May and June negatively consumer of seasonal or geographical- lion on December 31, 2005. This
impacted the production growth curve ly localized price variations. decrease was a result of company’s
- but expected to return to normal in In the first semester 2006, Petrobras decision to settle some of its long-term
the third quarter. invested US$ 5,979 million, obligations.
Petrobras ADRs versus DOW JONES and Amex Oil Indexes Economic and Financial Figures
RESULTS & RETROSPECTIVE
1st semester
495.8% (PBRA/ADR PN)
497.8% (PBR/ADR ON) In US$ million 2005 2004 Variation (%)
158.1% (Amex Oil) Sales of products and services 43,775 32,292 35.6
720
33.7% (Dow Jones)
640 Net operating revenues 33,521 24,428 37.2
560 Gross profit 16,352 11,814 38.4
480 Net income 6,514 4,165 56.4
400 Earnings per share 1.49 0.95 56.8
320 Net cash provided by operating activities 9,182 6,877 33.5
240 Capital expenditures 5,979 4,405 35.7
60 Net debt 9,497 14,076 (32.5)
80 Debt to equity ratio 52% 60% -–
May-03
Feb-03
Feb-04
Feb-05
Feb-06
Dec-02
Jun-03
Jul-03
Aug-03
Nov-03
Dec-03
Jun-04
Jul-04
Aug-04
Nov-04
Dec-04
Jun-05
Jul-05
Aug-05
Nov-05
Dec-05
Jun-06
Jan-03
Jan-04
Jan-05
Jan-06
Sep-03
Sep-04
Sep-05
May-04
May-05
May-06
Mar-03
Apr-03
Mar-04
Apr-04
Mar-05
Apr-05
Mar-06
Apr-06
Oct-03
Oct-04
Oct-05
Real Increase in Stock Price* Operating Performance
1st semester
800%
■ Ibovespa In thousand barrels of oil equivalent 2006 2005 Variation (%)
700% Average daily crude oil
658,2% ■ Petrobras PN
and gas production 2,276 2,175 5
600% ■ Petrobras ON
500% Oil product production 1,908 1,791 7
400% 342,1% Net exports 76 54 41
300% Refining and marketing operations
200%
Brasil – Utilization 91% 85% 6 pp
100% 79,0% Refining and marketing operations
45.8% 46.6% 19.5% 19.2% International – Utilization 81% 79% 2 pp
15.0% 9,6%
0%
10 Years Yeas 1 Year
Domestic crude oil of total
-100%
feedstock processed 80% 80% –
(*) Monthly changes discounted for inflation in accordance with IGP-DI index.

3. 2007-2011 BUSINESS PLAN
Investments accelerate with new projects
T
he forecasted increase of
US$ 34.7 billion in capital expen- Indicators Average Average
ditures over the next five years is 2006-2010 2007-2011
Return on Capital Employed (ROCE) (%) 15 16
largely a result of the inclusion of new
Funding for Long-Term Financing
projects amounting to US$ 17.4 billion.
(US$ Billion)* 2.9 3.1
A further US$ 7.8 billion relates to rising Cash Balance (end of period) (US$ Billion) 4.4 3.5
costs due to intense demand for oil indus- Financial Leverage
try-related equipment and services (Net Debt/Net Debt + Shareholders' Equity) (%) 28 25
together with a US$ 4.2 billion currency Operating Cash Flow before Interest and Taxes/
impact. In addition, projects that were to Interest 8.6 13.7
be executed jointly with other companies Free Cash Flow (US$ Billion) 1.5 1.5
will now be handled exclusively by
Petrobras, representing an investment of
US$ 2.9 billion. A further US$ 1.8 billion bpd, forecasted for 2006, to 3,493 International
will be dedicated to projects in progress.
Finally, increased capital expenditures
have been driven by an enhancement in
thousand bpd by 2011. The Company
estimates output at 4,556 bpd by 2015.
Petrobras estimates the demand for
P for business identify new
etrobras’ strategy for the interna-
tional division is to
areas , outside tradi-
the scope of some Company projects. natural gas to increase at an annual tional regions such as Latin America,
rate of 17% from an output of Africa and North America. However,
Macroeconomic 38.8 million m3/day to 99.2 million growth continues to be concentrated
indicators m3/day in 2011. Incorporating both E&P on the US sector of the Gulf of
P etrobras revisited the assumptions
for international tendencies on
which its 2007-2011 Business Plan had
and Gas and Energy areas, Company
investments in the natural gas chain will
total US$ 17.9 billion for the period. This
Mexico and Nigeria. Forecasted
investments for the overseas market
over the next five years is slated at
been prepared. The Company is work- will translate into Brazilian self-sufficiency US$ 12.1 billion, 82% more than in
ing on the basis of a higher Brent crude in the natural gas area, says Gabrielli. the previous plan. Of this total, 70%
price curve than in the previous plan- will be allocated to exploration and
ning exercise, albeit in a range that Downstream production. The goal is to increase
is lower than market consensus, and Distribution current output from 259 thousand
varying from US$ 55/bbl in 2007 to
US$ 35/bbl in the 2009/2011 period.
While this strategy translates into a
C apital expenditures planned for
the Downstream area over the
next five years amount to US$ 23.1 bil-
bpd to 568 thousand bpd in 2011.
For more details, access the presen-
tation on the 2007-2011 Business Plan
more conservative forecast for revenue lion, 62% more than the previous at http://www.petrobras.com.br/ri – at
flows, it also provides a greater plan. Of this total, US$ 14.2 billion the Get to Know Petrobras section –
guarantee that the necessary finance (61%) alone will be invested in refin- Corporate Strategy.
can be arranged going forward, ing and US$ 3.2 billion (14%) in the
Petrobras’ president, José Sergio petrochemical sector, where the prin-
Gabrielli argues. The Plan builds in a cipal project is the petrochemical com-
Brazilian GDP growth of 4.0% and a plex to be built at Itaboraí and São
foreign exchange rate of R$/US$ 2.50. Gonçalo in the state of Rio de Janeiro.
Petrobras also proposes to expand
Oil and natural gas its stake in the bi-fuel market, spear-
T The Company’s key investment
focus, Exploration & Production,
will account for US$ 40.7 billion of
heading domestic production in bio-
diesel and increasing its share in the
ethanol business. Aligned with this
capital expenditures, 63% more strategy, H-Bio, a technology recently
than in the previous plan. The esti- pioneered by the Company, repre-
mated growth in domestic demand for sents an important boost to this market.
oil products is 3.1% annually through The new Business Plan is appropriating
to 2011, when demand will reach US$ 2.2 billion to the Distribution area,
2,117 thousand bpd. Meanwhile, oil corresponding to an increase over the
and gas production in Brazil and over- previous plan of 131%, the largest rise
seas is to increase from 2,403 thousand for any area at Petrobras.

4. NEWS BOARD
H-BIO – Petrobras Technology
SUSTAINABILITY AND GOVERNANCE
Petrobras has developed a new refining process at its
operating units based on the processing of vegetable oil.
This process – known as H-BIO – uses vegetable oil as
an input for producing diesel oil. The new process,
which has been implemented by the Petrobras Research
and Development Center – Cenpes, has been tested
for 18 months at the Gabriel Passos Refinery (MG).
The Paraná Refinery is already producing the new fuel.
Governance
and Sustainability
Shareholders' receive
Survey
In a survey conducted
recognition
among shareholders and
quotaholders of the FMP-FGTS I n the first quarter of 2006,
Petrobras came second in the rank-
ing among the 15 largest oil compa-
Petrobras funds, the company
scored a good general indicator nies in the world for the items of
with an 86% satisfaction rate. Financing REVAP sustainability and ethics in a survey
The best evaluated indicators expansion conducted by the Management &
scoring above 90% were: Excellence (M&E) agency. This posi-
Profitability, Future Vision,
Petrobras is investing R$ 4.1 billion tion was better than such oil giants
in the expansion and modernization as Exxon, Chevron and Statoil.
Technology and Overseas Business.
of the Henrique Lage Refinery (SP). Petrobras was rated seventh in
Indicators scoring less than 80%
About 77% of these investments the last survey. This latest survey saw
were: Corporate Governance,
will go in environmental Petrobras tied with British Petroleum
Environmental Responsibility,
protection equipment and processes. (BP) with a global score of 85.82%
Energy Diversity and
These investments will generate as against a general average for the
Social Welfare.
greater operating efficiency, industry of 52,8%. In the Corporate
quality and safety. Governance item, Petrobras was
awarded a maximum score of
83.3% against an industry average
of 58.61% the best in the overall
Petrobras in Buenos Aires classification.
In April, the Buenos Aires Stock Exchange (BCBA) and the Brazilian Also significant were the results
Securities and Exchange Commission (CVM) approved the listing of for Transparency in which Petrobras’
Petrobras’ common and preferred shares in the Argentine market, rating was much higher at 82.44%
contributing to the further diversification of the shareholder base. than the market average of 54%.
This event does not imply any new share issue. Local investors The survey is based on objective
may invest directly in Petrobras shares. Financial trading volume criteria comprising of 280 items
amounted to more than 300 million pesos up to July 31. covering the areas of corporate gov-
ernance, social corporate responsibili-
ty, and ethics in management relations
and transparency. This corroborates
and validates Petrobras’s actions,
underlining the reliability of the infor-
mation provided to the Company’s
constituent public and stakeholders.
Newssheet edited by Petrobras' Investor Relations Department • Executive Manager: Raul Campos • Coordinator: Marcos Vinícius Guimarães • Edition: Petrobras'
Institutional Communications Department • Editors: Cláudio Paula and Tereza Lobo • Contact: Petrobras' Shareholders Department • Tel.: (55-21) 3224-
1540/4914 Fax: (55-21) 2262-3678 • 0800 282-1540 • Av. República do Chile, 65 / 2202-A • Centro – Rio de Janeiro – RJ – 20031-912 • E-mail: acionistas@petrobras.com.br
Depositary Bank: Citibank N.A.• Tel.: 1 212 657 1925 • Fax: 1 212 825 5398/825 21 03 • E-mail: alex.navarrete@citicorp.com
Visit our website at www.petrobras.com.br/ri/english